In 5-10 years from now, will the Ombudsman still be dismissing similar complaints on a T&C technicality, or will they instead be pausing to ask the client: “Did your adviser talk to you about downsizing protection?”
Stuart Wilson is marketing director of more 2 life
I have written before about the enigma that is my father – someone who has never, not even once, browsed the internet, doesn’t have an email address and thinks a “smartphone” is one that remembers the last number you dialed. He’s probably not unique, but certainly unusual by today’s tech-savvy, “Silver Surfer” standards.
Here’s another foible of his – customer service. If he is buying something in a shop and they only have those self-service tills available, he will make a member of staff scan and pack his shopping. He point blank refuses to do it himself. He won’t even put his card in the machine to pay; the poor, no doubt bemused member of staff has to do that. “It’s their job”, he says, grumpily. “I’m not doing their job for them – I’m the customer, they should be serving me!”
I can trace the genesis of this seemingly bizarre loathing of self-service machinery back to his time as a typewriter engineer at a large office supplies company, Reid’s, during the 1950s, 60s and 70s. Unusually for the time (even now!), this company had a female CEO and she was an absolute stickler for customer service. My dad tells me it wasn’t unheard of for Mrs Reid to jump into her own car and hand-deliver a box of pencils or a fresh supply of paper to an important customer if all the delivery drivers were busy on other errands.
It was as my dad was telling me about his latest self service till episode – with me outwardly laughing but inwardly cringing at the thought of how the shop assistant must have been feeling as she was made to un-self-scan all of his shopping – that I began to think about how customer service has changed markedly in the equity release industry in the past few years – and how, as the very fabric of this market evolves still further, we must always keep the customer and customer outcomes at the centre of everything we do.
The evolution of this market has been phenomenal of late, with new lenders arriving and new products and features being introduced to keep pace with growing consumer demand. There are now as many as 70-80 different product options and permutations across the spectrum of the equity release ‘market map’, offering more choice to potential clients but also the danger of sub-optimal outcomes as a result of a ‘wrong turn’ in the customer fact-find.
Let me give you an example. There is an increasing number of equity release complaints reaching the Ombudsman relating to early repayment charges (ERCs) incurred when a client downsized to a property outside of their lender’s criteria. Currently, the Ombudsman is not upholding any of these complaints because this porting caveat is spelled out clearly in lender T&Cs.
However, unlike 5-10 years ago when many of the loans of these complainants were taken out, today we have products on the market that have ‘downsizing protection’ features designed to help clients avoid ERCs in such circumstances. Which begs the question, in 5-10 years from now, will the Ombudsman still be dismissing similar complaints on a T&C technicality, or will they instead be pausing to ask the client: “Did your adviser talk to you about downsizing protection?”
Equity release is a specialised area of financial planning and one that, rightly, requires a client to go through a full advice process. We should always be designing a product solution around the client, to ensure the optimum outcome, not the other way around. But with consumers becoming increasingly aware and knowledgeable of this market, doing their own extensive research before even reaching out to an adviser, there is a danger that we assume some clients can “self serve” the best solution to their lending needs.
Interest rate and LTV are often the primary driving factors behind a product choice and no doubt many clients doing their own research will follow this track: what’s the biggest loan/facility I can get for the lowest price?” However, nuances such as future downsizing plans, protecting an inheritance for children and capital/interest repayment flexibility could well be over-looked by those unfamiliar with recent innovations and developments in this market.
This is where the role of a specialist adviser really comes into its own. But it’s important that advisers are asking the right questions and digging deep into the retirement needs and aspirations of their clients, looking at the bigger picture, so that they can present the widest range of possible lending options and keep their clients options open.
As this market increasingly enters the digital age, with more and more lenders introducing online portals that are helping to speed up processing and slash average app > offer > completion timescales, and with the likelihood of the arrival of new market ‘disrupters’ looking to cash in on this sector by enabling consumers with online apps, tools and calculators, the role of the equity release adviser in helping to carefully scan and package a consumer’s needs into the right product solution becomes more important than ever before.
